On Fathers Day 2003, all of the 130 workers at the Congress Hotel in Chicago walked out on the job, protesting management’s decision to cut wages and bring in minimum-wage, subcontracted workers.

Ten years later, the union — United Here’s Local 1 — is giving up its fight, and not because management gave in to any of the union’s demands. It simply decided that the fight had gone on long enough, and that its resources and attention would be better spent elsewhere. “The decision to end the Congress strike was a hard one, but it is the right time for the Union and the strikers to move on,” said Local 1 President Henry Tamarin. “The boycott has effectively dramatically reduced the hotel’s business. The hotel treats their workers and customers equally poor and the community knows it. There is no more to do there.”

Of course, the point of a strike isn’t just to hurt the employer’s business, it’s to improve pay and working conditions for employees. And after a staggeringly long strike, which United Here claims is the “worlds longest,” they came up empty handed. The significance of this particular loss for labor is probably not all that great in the grand scheme of things. These are just 130 workers, and sometimes management will resist demands even if strikers are able to hurt business significantly.

But the United Here’s loss in this battle is symbolic of more than just one unsuccessful strike. During the 2008 primary, when organized labor split its support between Hilary Clinton and Barack Obama, United Here was the first union to back Obama. As a Senator in 2007, Obama even picketed with Strike First outside the Congress Hotel, in solidarity with striking workers. And when President Obama was first elected in 2008, the labor movement was optimistic that it would finally have the support it needed in Washington to reverse decades of decline in the power of private sector unions. According to Randy Shaw, an attorney and labor activist, President Obama’s background as a community organizer and large Democratic majorities in Congress made the labor movement giddy that things would finally begin to reverse course.

But that optimism turned out to be unfounded. The signature piece of legislation, the so-called Employee Free Choice Act, that Democrats pushed in one form or another from 2006 through 2010 would have required businesses to recognize a union immediately once 50% or more workers had signed a card saying they supported it. (Under current law, businesses often have many months to mount an anti-unionization campaign after a majority of workers have declared they want a union, and before a secret ballot of workers has the final say.) The bill would also have established a binding arbitration process for unions and businesses that can’t agree on a contract, and it would have increased penalties for businesses that violate labor law.

But fierce Republican opposition and the twin priorities of passing stimulus and healthcare legislation sank the reform effort before it could get off the ground. “I don’t think the movement anticipated how difficult it would be to pass labor law reform,” Shaw says. “There was a general overconfidence, and there was never a move to get something passed short of the ideal, so in the end, nothing got passed.”

Following the election of Scott Brown in 2010, the Democrats lost their supermajority in the Senate, and their ability to pass much of anything at all — let alone anything as despised by Republicans as labor law reform. And unions have been public enemy number one for many on the right in recent years. Political figures like Wisconsin Governor Scott Walker have made major strides in curbing the power of public unions, and Republicans in Washington have done their best to hobble the National Labor Relations Board — which has been without five confirmed members since 2003.

All of this activity leaves the labor movement, and those pushing for the rights of workers and the poor, at a crossroads. In an effort to raise the living standards of the poor and middle class, the left has used both indirect government support (through laws that allow and even encourage unionization) and direct government support (through programs like Social Security and welfare). And for most of the 20th century, this two-pronged approach worked fairly well. Despite all the changes that occured in the U.S. economy, the share of company profits that go to workers (versus owners) remained steady at roughly 66%. But for the past decade, the ownership class has been taking more and more of the pie. This dynamic shows itself in stagnant wage growth, a problem that has been plaguing America since the 1980s.

Ironically, it may very well be the relative strength of today’s welfare programs that is undermining the urgency of a strong labor movement. The labor movement’s greatest successes have often come during very dire economic times. The height of the movement’s power was during the Great Depression, when it’s estimated that more than 25% of the labor force was out of work and, unlike today, there were no programs like food stamps or temporary federal welfare and very little in the way of unemployment insurance. For workers in the early part of the 20th century, the decision was either to organize or face dire poverty.

Today, it’s a different story. Federal and state governments spend more than $1 trillion annually on welfare programs, from the earned income tax credit to food stamps, to improve the lives of the working poor. And so while the labor movement has been very eager to support a robust welfare state, it may one of the factors that has made joining a union less appealing for much of the working class.